Exhibit 10.1


 


AMENDED AND RESTATED EMPLOYMENT AGREEMENT


 


THIS AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (this “Agreement”) is being made as
of this 14th day of May, 2004 between iPARTY CORP., a Delaware corporation (the
“Company”) and SAL PERISANO, an individual residing at 288 Huron Avenue,
Cambridge, Massachusetts (the  “Executive”).


 


W I T N E S S E T H:


 


WHEREAS,  the Company and the Executive
previously entered into an employment agreement dated as of March 26, 2002
(the “Prior Employment Agreement”); and


 


WHEREAS,  the Company and the Executive
desire to amend and restate the Prior Employment Agreement in its entirety as
set forth herein.


 


NOW, THEREFORE, in consideration of the mutual premises and
agreements contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:


 


1.                                       Term of Employment.


 


(a)                                  Except for earlier termination as provided in Section 11
hereof, the Executive’s employment under this Agreement shall be for a three
(3) year term (the “Employment Term”) commencing as of April 1,
2004.


 


(b)                                 On or about September 30, 2006 the Company
shall provide the Executive with written notice regarding whether or not the
Company intends to seek to extend the Employment Term.  A notice which states that the Company
intends to seek to the extend the Employment Term is referred to herein as a “Renewal
Notice” and a notice which states that the Company does not intend to seek
to extend the Employment Term is referred to herein as a “Non-renewal Notice.”  If the Company delivers a Non-renewal
Notice, the period of time from the date of the delivery of the Non-renewal
Notice to the expiration of the Employment Term is referred to herein as the “Transition
Period.”  If the Company delivers a
Renewal Notice to the Executive (i) the Employment Term shall automatically be
extended for a period of six (6) months and (ii) the Company and the Executive
shall seek to negotiate the terms of a new, mutually agreeable employment
agreement.  Such six (6) month extension
period, if (and only if) applicable, is referred to herein as the “Extension
Period,” and during the Extension Period, if (and only if) applicable, all
references herein to the Employment Term shall include the Extension Period.


 


2.                                       Duties, Responsibilities and
Positions.


 


(a)                                  During the
Employment Term, the Executive shall serve as the Chief Executive Officer of
the Company.  In addition, during the
Employment Term, the Company shall use its best efforts to (i) cause the
Executive to be nominated for election to the Board of Directors of the Company
(the “Board”) and (ii) subject to a Permitted Change (as defined below)
to be appointed as Chairman of the Board. 
During the Employment Term, the Executive shall perform all duties and
accept all responsibilities incidental to such positions or as may be assigned
to him by the Board, or any committee thereof, from time to time and which are


 

















 


normally associated with the
positions of Chief Executive Officer and (subject to a Permitted Change)
Chairman of the Board.  All employees of
the Company shall report to the Executive; provided, however,
that the Board or any committee thereof may direct employees of the Company to
report directly to the Board or any committee thereof in connection with any
internal investigations or reviews commenced by the Board or any committee
thereof.  The Executive shall be subject
at all times to the general supervision, orders, advice and direction of the
Board.  The Executive shall also
cooperate fully with the Board and other executive officers of the Company.


 


As used herein, a “Permitted
Change” shall mean the appointment of a person reasonably acceptable to the
Executive (which such acceptance shall not be unreasonably withheld or delayed)
as Chairman of the Board (i) in connection with any material acquisition,
financing or similar transaction which increases the size and scope of the
Company’s business or (ii) in order to comply with general corporate governance
practices then being followed by companies of similar size and scope.


 


(b)                                 Upon termination
of the Executive’s employment for any reason, the Executive shall immediately
resign as a member of the Board and resign from any other office or offices
within the Company and any subsidiary of the Company that the Executive may
then hold.


 


(c)                                  During the
Employment Term, the Executive shall devote substantially all his full working
time, energy and efforts to the business of the Company; provided, however,
that the Executive shall be allowed, to the extent that such activities do not
materially interfere with the performance of his duties and responsibilities
hereunder, to manage his personal and family financial and legal affairs and to
serve on civic, not-for-profit and charitable industry boards and advisory
committees.  The Executive shall only serve
on for-profit corporate boards of directors and advisory committees if approved
in advance, in writing, by the Board.


 


(d)                                 The Executive
represents to the Company that (i) the
Executive has the legal capacity to execute and perform this Agreement and (ii)
that he is not currently subject to or bound by any employment
agreement, non-competition covenant, non-disclosure agreement or other
agreement, covenant, understanding or restriction of any nature whatsoever
which would prohibit the Executive from executing this Agreement and performing
fully his duties and responsibilities hereunder, or which would in any manner,
directly or indirectly, materially limit the duties and responsibilities which
it is now reasonably foreseeable may now or in the future be assigned to the
Executive by the Board.


 


(e)                                  The Executive
shall at all times comply in all material respects with policies and procedures
adopted by the Company applicable to executives of the Company, including
without limitation, procedures and policies regarding conflicts of interest.


 


3.                                       Compensation.  For all services rendered by the Executive
in any capacity during the Employment Term, including without limitation,
services as an officer, director, or member of any committee of the Company, or
any subsidiary, affiliate or division thereof, the Executive shall be
compensated as follows (subject, in each case, to the provisions of


 


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Section 11 below):


 


(a)                                  Base Salary.  During the Employment Term, the Company
shall pay to the Executive a base salary on an annualized basis (the “Base
Salary”) as follows: (i) for the period from April 1, 2004 through
March 31, 2005, $275,000;  (ii) for
the period from April 1, 2005 through March 31, 2006, $287,500; and
(iii) for the period from April 1, 2006 through March 31, 2007,
$300,000.  The term “Base Salary” as
used in this Agreement shall refer to Base Salary in effect for the applicable
period set forth in the immediately preceding sentence.  The Base Salary shall be payable in
accordance with the customary payroll practices of the Company. The Base Salary
paid to the Executive shall at all times be the highest salary paid or payable
by the Company to any of its employees.  
If, during the Employment Term, the Company consummates any material
acquisitions or similar transactions which increase the size and scope of the
Company’s business, the Compensation Committee of the Board shall convene as
promptly as reasonably practicable for the purpose of discussing whether or not
it is appropriate to increase the Executive’s Base Salary; provided, however,
that no such increase shall be required.


 


(b)                                 Bonus.  In addition to the Base Salary provided
herein, the Executive shall be entitled to participate in, and may receive
performance bonus payments under, such annual bonus plan or plans as the
Compensation Committee of the Board may establish from time to time for senior
executive officers of the Company.  Any
such performance bonus or bonuses shall be determined in the sole discretion of
the Compensation Committee of the Board. Without limiting the generality of the
foregoing, such performance bonus or bonuses, if paid, may be paid in stock,
stock options, restricted stock, cash, or any combination thereof.


 


(c)                                  Benefits.  During the Employment Term, the Executive
shall be entitled to participate in all employee benefit and equity plans and
fringe benefits and prerequisites generally provided to senior executives of
the Company, in each case subject to the eligibility requirements and other
terms and provisions of such plans and programs.  The Company may amend, modify or rescind any employee benefit
plan or program and change employee contribution amounts or benefit costs
without notice in its discretion.


 


4.                                       Stock Options Matters.  On
May 6, 2004, the Executive was granted stock options (the “Options”) for
an aggregate of 460,000 shares of common stock of the Company, at an exercise
price of $0.95 per share (the closing price of the common stock on such date),
pursuant to the Company’s Amended and Restated 1998 Incentive and
Nonqualified Stock Option Plan (the “Plan”).  The Options shall vest as follows:  provided the Executive remains continuously
employed by the Company through March 31, 2005, options for 153,334 shares
shall vest on March 31, 2005; provided the Executive remains continuously
employed by the Company through March 31, 2006, options for an additional
153,333 shares shall vest on March 31, 2006; and provided the Executive
remains continuously employed by the Company through March 31, 2007,
options for the final 153,333 shares shall vest on March 31, 2007.  The Options shall be subject to the terms of
the Plan and shall be evidenced by a Stock Option Grant Agreement between the
Company and the Executive.


 


5.                                       Expenses; Vacations.  The Executive shall be entitled to
reimbursement for reasonable travel and other out-of-pocket expenses
necessarily incurred in the performance of


 


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his duties hereunder, upon
submission and approval of written statements and bills in accordance with the
then regular procedures of the Company. 
The Executive shall be entitled to four weeks paid vacation per calendar
year, with such vacation to be scheduled and taken in accordance with the
Company’s standard vacation policies. 
Up to two (2) weeks accrued but unused vacation time may be carried
forward from year to year; provided, however, in no event shall
more than an aggregate of six (6) weeks of unused vacation time be accrued
during the Employment Term.


 


6.                                       Representations and Warranties
of the Company.  The Company
represents and warrants to, and agrees with, the Executive that (i) pursuant to
the Delaware General Corporation Law, the Company’s Certificate of
Incorporation, as amended to date (the “Charter”), provides for
indemnification of officers and directors of the Company and that so long as
the Executive serves as an executive officer of the Company, unless required by
applicable law the Charter will not be amended to limit such indemnification
without the written consent of the Executive and (ii) the Company maintains an
officers and directors liability insurance policy which insures the Executive
(subject to the limitations contained therein) and will maintain such a policy
for so long as the Executive serves as an executive officer of the Company.


 


7.                                       Developments.  All developments, including inventions,
whether patentable or otherwise, trade secrets, discoveries, improvements,
ideas and writings which relate to or may be useful in the business of the
Company, and which the Executive, either by himself or in conjunction with any
other person or persons, has conceived, made, developed, acquired or acquired
knowledge of while engaged in any activity on behalf of or while acting for the
Company during the course of his employment by the Company (the “Developments”),
shall, on and after the start of the Employment Term, become the sole and
exclusive property of the Company.  The
Executive hereby assigns, transfers and conveys, and agrees to so assign,
transfer and convey to the Company, all of his right, title and interest in and
to any and all such Developments and to disclose in writing to the Board, as
soon as practicable, all Developments that he believes in his good faith judgment
may be of material significance to the Company, and to reduce any such
Developments to writing at the request of Board if he has not already done
so.  At any time, and from time to time,
upon the request and at the expense of the Company, the Executive will execute
and deliver any and all instruments, documents and papers, give evidence and do
any and all other acts which, in the reasonable opinion of counsel for the
Company, are or may reasonably be necessary or desirable to document such
transfer or to enable the Company to file and prosecute applications for and to
acquire, maintain and enforce any and all patents, trademark registrations or
copyrights under United States or foreign law with respect to any such
Developments or to obtain any extension, validation, reissue, continuance or
renewal of any such patent, trademark or copyrights; provided only that any
such actions requested following termination of employment shall not
unreasonably interfere with Executive’s then employment, business or other activities.  The Company will be responsible for the
preparation of any such instruments, documents and papers and for the
prosecution of any such proceedings and will reimburse the Executive for all
reasonable expenses incurred by him in compliance with the provisions of this Section 7.  The Developments shall not include any
knowledge or information of any kind acquired by or disclosed to the Executive
while serving in his capacity as a member of the board of directors of any
non-Company entity, in his capacity as a private investor, or in any other
circumstance during which the Executive is not or was not engaged in any
activity on behalf of or acting for the Company.  Furthermore, nothing herein shall preclude Executive from


 


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utilizing Developments
applicable to retailing generally (whether from stores, via catalog, via
e-commerce or otherwise) following termination of employment, subject always to
the provisions of Section 8 below.


 


8.                                       Non-Competition and
Non-Solicitation.


 


(a)                                  Non-Competition.  The Executive agrees that the
Executive will not, during the “Restrictive Period”, as defined below, engage
in, or otherwise directly or indirectly be employed by, or act as a consultant
or lender to, or be a director, officer, employee, owner, co-venturer, member
or partner of, or use or expressly permit the Executive’s name to be used by
(collectively an “Engagement With”), any business, entity or
organization which has a primary line of business (i.e. representing more than
4.9% of its revenue) involving the sale at retail, whether from store
locations, and/or by or from direct mail, catalogues and/or websites, of party
goods and/or supplies anywhere in the United States (a “Competing Entity”);
provided, however, that in each case the provisions of this Section 8(a)
will not be deemed breached merely because the Executive owns not more than
five percent (5.0%) of the outstanding common stock of a Competing Entity, if,
at the time of its acquisition by the Executive, such stock is listed on a
national securities exchange, is reported on NASDAQ, or is regularly traded in
the over-the-counter market by a member of a national securities exchange; and provided,
further, however, that, subject to the provisions of Section 8(b),
nothing herein shall prevent the Executive from working for a business segment
or department of a Competing Entity, or a subsidiary, division or other entity
that controls or is controlled by a Competing Entity if (and only if), the
business segment or department of the Competing Entity for which the Executive
provides services, or the subsidiary, division or other entity by which the
Executive has an Engagement With (as the case may be), (1) does not itself
compete with the Company, and (2) the Executive does not provide any services,
advice, assistance and/or guidance to any business segment or department,
subsidiary, division, or other entity of the Competing Entity which competes
with the Company.  As used in this
Section the “Restrictive Period” shall be (i) the period the
Executive is employed by the Company and (ii) the period of one (1) year after
the Executive ceases to be employed by the Company for any reason, or, in the
case of the Executive’s Engagement With any Competing Entity that operates
retail stores which are located in any states where the Company has retail
stores on the date of the Executive’s cessation of employment, the period of
eighteen (18) months period after the Executive ceases to be employed by the
Company for any reason.


 


(b)                                 Non-Solicitation. During the
Restrictive Period, the Executive will not, either directly or indirectly, (i)
call on or solicit (for the purpose of diverting business from the Company) any
person, firm, corporation or other entity who or which at the time of such
termination was, or within one (1) year prior thereto had been, a customer of
the Company or (ii) solicit the employment of any person (other than any family
member) who was employed the Company on a full or part-time basis at any time
during the six (6) months prior to the termination of Executive’s employment,
unless such person prior to such solicitation of employment was involuntarily
discharged by the Company.


 


9.                                       Confidential Information.  The Executive recognizes and acknowledges
that by reason of his employment by and service to the Company, he has had and
will have access to confidential information of the Company and its affiliates,
including without limitation,


 


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information and knowledge
pertaining to products and services offered, ideas, plans, trade secrets,
proprietary information, advertising, distribution and sales methods and
systems, sales and profit figures, customer and client lists, and relationships
between the Company and its customers, clients, suppliers and others who have
business dealings with the Company (collectively, “Confidential Information”).  The Executive acknowledges that such
Confidential Information is a valuable and unique asset and covenants that he
will not, either during or at any time after the end of the Employment Term,
use or disclose any such Confidential Information to any person or entity for
any reason whatsoever (except as his duties described herein may require)
without the prior authorization of the Board, unless such information is in or
enters the public domain through no fault of the Executive or is otherwise
lawfully known by third parties.  In the
event the Executive becomes or may become legally compelled to disclose any
Confidential Information (whether by deposition, interrogatory, request for
documents, subpoena, civil investigative demand or other process or otherwise),
the Executive shall provide to the Board prompt prior written notice of such
requirement so that the Company may seek a protective order or other
appropriate remedy and/or waive compliance with the terms of this Section 9.  In the event that such protective order or
other remedy is not obtained, or that the Company waives compliance with the
provisions this Section 9, the Executive shall furnish only that
portion of the Confidential Information which it is advised by counsel is
legally required to be disclosed, and shall use his best efforts to insure that
confidential treatment shall be afforded such disclosed portion of the
Confidential Information.


 


10.                                 Equitable Relief.


 


(a)                                  The Executive
acknowledges that the restrictions contained in Sections 7, 8, and 9
hereof are reasonable and necessary to protect the legitimate interests of the
Company, that the Company would not have entered into this Agreement in the
absence of such restrictions, and that any violation of any provision of those
Sections will result in irreparable injury to the Company.  The Executive represents that his experience
and capabilities are such that the restrictions contained in Section 8  hereof will not prevent the Executive from
obtaining employment or otherwise earning a living at the same general level of
economic benefit as is anticipated by this Agreement.  THE EXECUTIVE FURTHER REPRESENTS AND ACKNOWLEDGES THAT (i) HE HAS
BEEN ADVISED BY THE COMPANY TO CONSULT HIS OWN LEGAL COUNSEL IN RESPECT OF THIS
AGREEMENT, (ii) THAT HE HAS HAD FULL OPPORTUNITY, PRIOR TO EXECUTION OF THIS
AGREEMENT, TO REVIEW THOROUGHLY THIS AGREEMENT WITH HIS COUNSEL, AND (iii) HE
HAS READ AND FULLY UNDERSTANDS THE TERMS AND PROVISIONS OF THIS AGREEMENT.


 


(b)                                 The Executive
agrees that the Company shall be entitled to preliminary and permanent
injunctive relief, without the necessity of proving actual damages, as well as
an equitable accounting of all earnings, profits and other benefits arising
from any violation of Sections 7, 8, or 9 hereof, which rights shall be
cumulative and in addition to any other rights or remedies to which the Company
may be entitled.  In the event that any
of the provisions of Sections 7, 8, or 9 hereof should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then such
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, product or service, or other limitations permitted by applicable
law.


 


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(c)                                  The Company
and the Executive each irrevocably and unconditionally (i) agree that any suit,
action or other legal proceeding arising out of this Agreement, including
without limitation, any action for preliminary or permanent injunctive relief
or other equitable relief, may be brought in the United States District Court
for the Eastern District of Massachusetts, or if such court does not have
jurisdiction or will not accept jurisdiction, in any court of general
jurisdiction in the Commonwealth of Massachusetts, (ii) consent to the
non-exclusive jurisdiction of any such court in any such suit, action or
proceeding, and (iii) waive any objection which such party may have to the
laying of venue of any such suit, action or proceeding in any such court.  The Company and the Executive each also
irrevocably and unconditionally consent to the service of any process,
pleadings, notices or other papers in a manner permitted by the notice
provisions of Section 15 hereof.


 


(d)                                 The Executive
agrees that he will provide a copy of Sections 7, 8, and 9 of this
Agreement to any for-profit business or enterprise (i) which he may directly or
indirectly own, manage, operate, finance, join, participate in the ownership,
management, operation, financing, control or control of, or (ii) with which he
may be connected with as an officer, director, employee, partner, principal,
agent, representative, or consultant, or in connection with which he may use or
expressly permit his name to be used; provided, however, that
this provision shall not apply in respect of Section 8 of this
Agreement after expiration of the time periods set forth therein.


 


11.                                 Termination.


 


(a)                                  Cause.  Notwithstanding anything herein contained,
if on or after the date hereof and prior to the end of the Employment Term, the
Executive is terminated “For Cause” (as defined below) then the Company shall
have the right to give notice of termination of the Executive’s services
hereunder as of a date to be specified in such notice, and the Employment Term
shall terminate on the date so specified. 
Termination “For Cause” shall mean the Executive shall (i) be
charged with the commission of a felony crime; (ii) commit any act or omit to
take any action in bad faith and to the detriment of the Company; (iii)
intentionally fail to follow any commercially reasonable and lawful direction
of the Board and continue to fail to follow such direction within ten (10) days
of written notification of same; (iv) commit an act of fraud against the
Company; (v) knowingly provide materially false information concerning the
Company to the Board, any governmental body, any regulatory agency, any lender
or other financing source of the Company, or any shareholder of the Company; or
(vi) breach any term of this Agreement and fail to correct such breach within
ten (10) days after written notice of commission thereof.  In the event that this Agreement is
terminated “For Cause” pursuant to this Section 11(a), then the
Executive shall be entitled to receive only the Base Salary at the rate
provided in Section 3(a) to the date on which termination shall
take effect, any accrued vacation and unpaid expenses as contemplated under Section 5,
and (iii) any performance bonus earned and unpaid for any prior plan periods
and, if applicable under any performance bonus plan for the year of
termination, the amount, if any, earned thereunder to the date of termination
(collectively, “Accrued Bonus Payments”).


 


(b)                                 Disability.  In the event that the Executive shall be
physically or mentally incapacitated or disabled or otherwise unable fully to
discharge his duties hereunder, with reasonable accommodation, for more than
180 days during any rolling 12-month period,


 


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then the Company may terminate
the Executive’s employment hereunder for “Disability” upon thirty (30)
days’ written notice to the Executive, and no further compensation shall be
payable to the Executive, except for any accrued and unpaid Base Salary as
contemplated under Section 3(a), any accrued vacation and unpaid
expenses as contemplated under Section 5, any Accrued Bonus
Payments and as may otherwise be provided under any disability insurance
policy, if any.


 


(c)                                  Death.  In the event that the Executive shall die,
then his employment shall terminate on the date of his death, and no further
compensation shall be payable to the Executive, except for any accrued and
unpaid Base Salary as contemplated under Section 3(a), any accrued
vacation and unpaid expenses as contemplated under Section 5, any
Accrued Bonus Payments and as may otherwise be provided under any insurance
policy or similar instrument.


 


(d)                                 Expiration.  This Agreement shall automatically terminate
upon the expiration of the Employment Term and upon such expiration, the
following payment provisions shall apply:


 


(i)                                     In the event
that the Company delivers a Non-renewal Notice, upon expiration of the
Employment Term, no further compensation shall be payable to the Executive,
except for (1) any accrued and unpaid Base Salary though the effective date of
such termination as contemplated under Section 3(a), (2) any
accrued vacation and unpaid expenses as contemplated under Section 5,
and (3) any Accrued Bonus Payments.  In
addition, subject to the provisions of Section 11(i) hereof and the
Executive’s compliance (and continued compliance) with the provisions of Sections
7, 8 and 9 hereof, (Y) the Company shall pay to the Executive a severance
payment equal to six (6) months salary at the Base Salary then in effect,
payable in six (6) equal monthly installments and (Z) for such six (6) month
period, the Executive shall be entitled to continue to receive his then current
health, life and disability insurance benefits or, in the case of health
insurance benefits, payment by the Company of applicable “COBRA” payments.


 


(ii)                                  In the event that the Company delivers a Renewal
Notice, upon expiration of the Extension Period no further compensation shall
be payable to the Executive, except for (1) any accrued and unpaid Base Salary
though the effective date of such termination as contemplated under Section 3(a),
(2) any accrued vacation and unpaid expenses as contemplated under Section 5,
and (3) any Accrued Bonus Payments.  For
the avoidance of doubt, the termination of this Agreement upon the expiration
of the Extension Period shall not be deemed a termination without cause
pursuant to Section 11(e) and the Executive shall not be entitled
to receive any severance or similar payment or benefit provided for in Section 11(e)
upon expiration of the Extension Period.


 


(e)                                  Termination
Without Cause.  In the event that
the Company terminates the Executive for any reason other than as provided
under Section 11(a), 11(b), 11(c) or 11(d), then the Executive’s
employment shall terminate upon thirty (30) days’ written notice to the
Executive and, the Company shall be obligated to pay to the Executive Base Salary
earned, but not yet paid to the Executive, prior to the date of such
termination in accordance with Section 3(a), and reimburse the
Executive for any accrued vacation and unpaid expenses incurred by the


 


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Executive through the date of
termination in accordance with Section 5, and any Accrued Bonus
Payments.  In addition, subject to the
provisions of Section 11(i) hereof and the Executive’s compliance
(and continued compliance) with the provisions of Sections 7, 8 and 9
hereof, (i) the Company shall pay to the Executive a severance payment equal to
twelve (12) months salary at the Base Salary then in effect, payable in twelve
(12) equal monthly installments and (ii) for such twelve (12) month period, the
Executive shall be entitled to continue to receive his then current health,
life and disability insurance benefits or, in the case of health insurance
benefits, payment by the Company of applicable “COBRA” payments (collectively
(i) and (ii) are called the “Severance Payments”).


 


(f)                                    Change of
Control. Subject to the provisions of Sections 11(i) and 11(j),
in the event that Company shall terminate this Agreement and the Executive’s
employment hereunder pursuant to the provisions of Section 11(e)
within six (6) months following a Change in Control (as defined below) or the
Executive shall terminate this Agreement and the Executive’s employment
hereunder for Good Reason (as defined in Section 11(h)) within six
(6) months following a Change in Control, then, in lieu of (and not in addition
to) the amounts to be paid (and benefits to be provided) by the Company
pursuant to Section 11(e) or Section 11(h), the Company
shall have no further obligations under this Agreement to the Executive other
than the obligation to: (i) pay to the Executive Base Salary earned, but not
yet paid to the Executive, prior to the date of such termination in accordance
with Section 3(a), (ii) reimburse the Executive for any accrued
vacation and unpaid expenses incurred by the Executive through the date of
termination in accordance with Section 5, and pay any Accrued Bonus
Payments and (iii) subject to the provisions of Sections 11(i) and 11(j),
pay to the Executive a lump sum amount equal to the product of (1) the
Executive’s Base Salary then in effect and (2) a fraction, the numerator of
which is the number of days remaining from the date the termination occurred
through the end of the Employment Term, but, subject to the provisions of Section 11(j),
in no event less than 912, and the denominator of which is 365. In addition,
for the twelve (12) month period following the date of such termination, the
Executive shall be entitled to continue to receive his then current health,
life and disability insurance benefits or, in the case of health insurance
benefits, payment by the Company of applicable “COBRA” payments.


 


As used in this Agreement, “Change in Control” shall mean the
occurrence of any one of the following events:


 


(i)                                     any Person other
than an employee benefit plan of the Company or of any wholly-owned subsidiary
of the Company becomes the owner of 40% or more of the combined voting power of
the Company’s then outstanding voting securities and thereafter individuals who
were not directors of the Company prior to the date such Person became a 40%
owner are elected as directors pursuant to an arrangement or understanding
with, or upon the request of or nomination by, such Person and constitute at
least 1/2 of the Board; provided, however, such acquisition of
ownership shall not constitute a Change of Control if the Executive or an
Executive Related Party is the Person or a member of a group constituting the
Person acquiring such ownership; or


 


(ii)                                  there occurs any
solicitation or series of solicitations of proxies by or on behalf of any
Person other than the Board and thereafter individuals who were not directors
of the Company prior to the commencement of such solicitation or series of
solicitations are


 


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elected as directors pursuant to an arrangement or understanding with,
or upon the request of or nomination by, such Person and constitute at least
1/2 of the Board of Directors; or


 


(iii)                               the Company executes an
agreement of sale, merger or consolidation which contemplates that (x) after
the effective date provided for in such agreement, all or substantially all of
the business and/or assets of the Company shall be owned, leased or otherwise
controlled by another Person and (y) individuals who are directors of the
Company when such agreement is executed shall not constitute at least 1⁄2 of the
board of directors of the survivor or successor entity immediately after the
effective date provided for in such agreement; provided, however,
that for purposes of this paragraph (iii), if such agreement requires as a
condition precedent approval by the Company’s shareholders of the agreement or
transaction, a Change of Control shall not be deemed to have taken place unless
and until such approval is secured (but upon any such approval, a Change of Control
shall be deemed to have occurred on the effective date of such agreement).


 


“Executive Related Party”
shall mean any Affiliate or Associate of the Executive other than the Company
or a Subsidiary of the Company.  The
terms “Affiliate” and “Associate” shall have the meanings ascribed thereto in
Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) (the term “registrant” in the definition of “Associate” meaning, in
this case, the Company).


 


“Person” shall have the
meaning used in Section 13(d) of the Exchange Act, as in effect on the
date hereof.


 


(g)                                 Termination
by Executive.  In the event that
the Executive desires to resign voluntarily as Chief Executive Officer, the
Executive covenants to provide the Company with not less than ninety (90) days
written notice of any such voluntary resignation; and further the Executive
covenants to cooperate in good faith in order to facilitate a smooth transfer
of authority during the period from notice of resignation to the date of termination.  In the event that the Executive’s employment
is terminated by the Executive pursuant to this Section 11(g), then
the Executive shall be entitled to receive an amount payable in a lump sum
within ten (10) business days following the date of termination, equal to the
sum of any accrued and unpaid Base Salary as contemplated by Section 3(a),
any accrued and unpaid expenses as contemplated by Section 5 and
any Accrued Bonus Payments.


 


(h)                                 Good Reason.  The Executive may, upon thirty (30) days
written notice, terminate his employment with the Company for “Good
Reason”.  “Good Reason” shall
mean any material breach by the Company of its obligations hereunder which are
not cured within ten (10) days following receipt of written notice from the
Executive detailing such breach.  The
parties agree that a material breach shall mean, (x) any material reduction in
the Executive’s duties, authority, reporting relationships or responsibilities
(whether or not accompanied by a title change) not consented to by the
Executive, other than a Permitted Change, and (y) the relocation of the
principal executive offices of the Company a distance of more than 35 miles
from its current location no consented to by the Executive.  Notwithstanding the foregoing or anything to
the contrary contained herein, the Executive shall not be entitled to terminate
his employment for “Good Reason” (1) in connection with a Permitted Change, or
(2) at any time during the Extension Period or the Transition Period, for any
reason.  In the event that the


 


10

















 


Executive terminates this
Agreement for Good Reason, the Company shall be obligated to pay to the
Executive Base Salary earned, but not yet paid to the Executive, prior to the
date of such termination in accordance with Section 3(a), reimburse
the Executive for any accrued vacation and unpaid expenses incurred by the
Executive through the date of termination in accordance with Section 5
and pay any Accrued Bonus Payments.  In
addition, subject to the provisions of Section 11(i) hereof, and
the Executive’s compliance (and continued compliance) with the provisions of Sections
7, 8 and 9 hereof, the Company shall pay and provide to the Executive the
Severance Payments.


 


(i)                                     Release.  Notwithstanding anything to the contrary
contained in this Agreement, the Executive (or his estate) shall not be
entitled to receive the payments and benefits set forth in this Section 11
(other than Base Salary through the effective date of termination in accordance
with Section 3(a) hereof and reimbursement of expenses in
accordance with Section 5) prior to (i) the execution and delivery
by the Executive to the Company of a 
valid and fully effective general release and nondisparagement agreement
(in form and substance reasonably satisfactory to the Company) of all claims,
including but not limited to the Age Discrimination in Employment Act, Title
VII of the Civil Rights Act of 1964, which the Executive might have at such
time against the Company and (ii) the resignation of the Executive from all
positions of any nature which the Executive may then have held with the Company
and any subsidiary of the Company.


 


(j)                                     Limitation as
to Amounts Payable.  Notwithstanding
any provision of this Agreement to the contrary (including without limitation
the provisions of Section 11(f)), if all or any portion of the
amounts to be paid to the Executive under this Agreement otherwise would be a
“parachute payment,” as defined in section 280G(b)(2) of the Internal
Revenue Code of 1986, as amended (the “Code”) and the Treasury
Regulations thereunder, the aggregate present value of the total amounts to be
paid to the Executive under this Agreement shall be limited to an amount that
is less than three times the Executive’s “annualized includible compensation
for the base period,” as defined in section 280G(d) of the Code and any
Treasury Regulations thereunder; provided, however, that in no
event shall the amount payable under this Agreement be reduced pursuant to this
Section 11(j) to less than the maximum amount that may be paid to
the Executive without causing any portion of such amount to become
nondeductible under section 280G of the Code and subject to the excise tax
imposed by section 4999 of the Code. 
The determination of the Executive’s “annualized includible compensation
for the base period” and the deductibility of payments made pursuant to this
Agreement shall be made by the independent outside accounting firm regularly
retained by the Company.  For purposes
of this Section 11(j), “present value” shall be determined in
accordance with section 280G of the Code and the Treasury Regulations
thereunder.


 


12.                                 Survival. Except as
otherwise provided in this Agreement, notwithstanding the termination of this
Agreement or the Executive’s employment for any reason, the Executive’s
obligations under Sections 2(b), 7, 8, and 9 hereof shall survive and
remain in full force and effect for the periods therein provided, and the
provisions for equitable relief against the Executive in Section 10
hereof shall continue in force, along with the provisions of Sections 12
through 20 hereof.  In addition, the
obligations of the Company set forth in Section 11 shall survive
any termination (as applicable) and shall remain in full force and effect until
such obligations are satisfied in full (subject,
as applicable, to the Executive’s


 


11

















 


compliance with the provisions of Section11(i)).


 


13.                                 Assignment.  All of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective heirs, executors, administrators, legal representatives,
successors and assigns of the parties hereto, except that the duties and
responsibilities of the Executive hereunder are of a personal nature and shall
not be assignable or delegatable in whole or in part by the Executive.


 


14.                                 Modification.  This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof,
supersedes all existing agreements between them concerning such subject matter,
and may be modified only by a written instrument duly executed by each party.


 


15.                                 Notices.  All notices and other communications
required or permitted hereunder or necessary or convenient in connection
herewith shall be in writing and shall be deemed to have been given when hand
delivered or three (3) days after being mailed by registered or certified mail,
as follows (provided that notice of change of address shall be deemed given
only when received):


 


If to the Company:


 


iParty Corp.


270 Bridge Street


Suite 301


Dedham, MA 02026


Attn: Corporate Secretary


 


With a required copy to:


 


Lowenstein Sandler PC


65 Livingston Avenue


Roseland, NJ 07068


Attn:  Douglas N. Bernstein,
Esq.


Fax:  973-597-2400


 


If to the Executive:


 


Sal Perisano


288 Huron Avenue


Cambridge, MA 02138


 


16.                                 Remedies Cumulative; No Waiver.  No remedy conferred upon the Company by this
Agreement is intended to be exclusive of any other remedy, and each and every
such remedy shall be cumulative and shall be in addition to any other remedy
given hereunder or now or hereafter existing at law or in equity.  No delay or omission by the Company in
exercising any right, remedy or power hereunder or existing at law or in equity
shall be construed as a waiver thereof, and any such right, remedy or power may
be exercised by the


 


12

















 


Company from time to time and
as often as may be deemed expedient or necessary by the Company in its sole
discretion.


 


17.                                 Binding Effect.  The Executive’s rights and obligations under
this Agreement shall not be transferable by assignment or otherwise, such
rights shall not be subject to encumbrance or the claims of the Executive’s
creditors, and any attempt to do any of the foregoing shall be void.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the Executive and his heirs and
personal representatives, and shall be binding upon and inure to the benefit of
the Company and its successors and those who are its assigns under Section 13.


 


18.                                 Entire Agreement; Contents of
Agreement.


 


(a)                                  This
Agreement supersedes all prior agreements in their entirety, including without
limitation the Prior Employment Agreement, effective as of April 1, 2004,
and sets forth the entire understanding among the parties hereto with respect
to the subject matter hereof and cannot be changed, modified, extended or
terminated except upon written amendment executed by the Executive and approved
by the Board and executed on behalf of the Company by a duly authorized
officer.  The Executive acknowledges
that the effect of this provision is that no oral modifications of any nature
whatsoever to this Agreement shall be permitted.


 


(b)                                 The Executive
acknowledges that from time to time, the Company may establish, maintain and
distribute manuals or handbooks or personnel policy manuals, and officers or
other representatives of the Company may make written or oral statements
relating to personnel policies and procedures. 
Such manuals, handbooks and statements are intended only for general
guidance.  No policies, procedures or
statements of any nature by or on behalf of the Company (whether written or
oral, and whether or not contained in any manual or handbook or personnel
policy manual), and no acts or practices of any nature, shall be construed to
modify this Agreement or to create express or implied obligations of any nature
to the Executive.


 


19.                                 Headings.  The headings in this Agreement are solely
for the convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.


 


20.                                 Counterparts; Governing Law.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  It shall be governed by, and construed in
accordance with, the laws of The Commonwealth of Massachusetts, without giving
effect to the rules governing the conflicts of laws.


 


IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.


 


iPARTY CORP.


 


	
  By:

  	
   /s/ PATRICK FARRELL

  	
   

  	
  /s/ SAL PERISANO

  	
   

  
	
  Name:  Patrick Farrell

  	
  Sal Perisano

  
	
  Title:  President and Chief
  Financial Officer

  	
   

  



 


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